Wow, this resignation took place a mere day before the Treasury select committee hearings on Wednesday. The Wall Street Journal bizarrely sent a news alert out announcing the resignation, yet it links to a front page story that is out of date, saying that Diamond “resisted pressure to resign” and has “no plans to leave. FT Alphaville, natch, already has the resignation announcement from the board posted, which clearly shows that Diamond has resigned with “immediate effect” and that the departing chairman, Marcus Aigus, will lead the search for his replacement.

This sudden announcement also makes it seem much more likely that serious shoes will drop at the Wednesday hearings.

Although this news has just broken, and I’m sure there will be a ton more commentary in the next few hours, I suspect the proximate cause is that Diamond’s attempts to defend the rigging of Libor during the crisis as being tacitly approved by the Bank of England was not going to fly.

This is what Diamond claimed, in a letter submitted in advance of the Treasury select committee hearing (boldface ours):

The second issue relates to decisions taken in relation to the LIBOR setting process during the credit crisis. The authorities found that Barclays reduced its LIBOR submissions to protect the reputation of the bank from negative speculation during periods of acute market stress. The unwarranted speculation regarding Barclays liquidity was as a result of its LIBOR submissions being high relative to those of other banks. At the time, Barclays opinion was that those other banks’ submissions were too low given market circumstances.

To be clear, Barclays encountered no liquidity problems through 2007 and 2008. The inaccurate speculation about potential liquidity problems in the two periods noted created a real and material risk that the bank and its shareholders would suffer damage. It was, as you will recall, a period of extraordinary turbulence and uncertainty. This raised questions for the bank about the integrity of the LIBOR setting process, and various individuals within Barclays raised issues externally about that, including with the British Bankers’ Association, Financial Services Authority, Bank of England and US Federal Reserve.

Even taking account of the abnormal market conditions at the height of the financial crisis, and that the motivation was to protect the bank, not to influence the ultimate rate, I accept that the decision to lower submissions was wrong.

In other words, Diamond was saying “you can’t really blame us for this, we told everyone and no one said no.” We’ll find out soon enough, but the effort to shift blame to the regulators may be what sunk him. Paul Tucker, the deputy governor to the Bank of England to whom Diamond spoke directly on October 28, 2012, has had subordiantes issue denials of Diamond’s account. Paul Mason of the BBC reported a few hours ago that the FSA effectively called Diamond a liar (emphasis ours):

As Barclays struggled to avoid being forced to take bailout money from the UK government, on 29 October 2008: “A senior Bank of England official contacted a senior Barclays manager… As the substance of the conversation was passed to other Barclays employees, certain Barclays managers formed the understanding that they had been instructed by the Bank of England to lower Barclays’ Libor submissions, and instructed the Barclays Dollar and Sterling Libor submitters to do so – even though that was not the understanding of the senior Barclays individual who had the call with the Bank of England official.”

These senior people have now been named by the BBC’s business editor Robert Peston: Paul Tucker at the Bank of England, and Bob Diamond at Barclays.

Thus, the official picture drawn by the FSA is that the Bank of England did not instruct Barclays to fiddle the rate, and that Bob Diamond “did not understand” that he had been so instructed.

The other interesting side effect is that this development, that of two heads falling in short succession at the top of one of the UK’s biggest banks, the only major institution not to receive any bailout funds, will raise the visibility of the Libor scandal in the US considerably. One correspondent has said the price manipulation goes back to 2001, and if that proves to be true, this is an even bigger cesspool that the reports so far envision. And the fact that top executives have been forced to resign from a bank that cooperated in the investigations and the settlement documents said deserved to be treated with leniency as a result, raises the question of what sort of sanctions should be meted on the executives of less cooperative and presumably equally culpable institutions.

Update: Apparently the US financial press has started circling the wagons. Although Bloomberg’s editorial yesterday took a firmly critical stance on the Libor scandal, furzy mouse report that the Bloomberg talking heads today are taking the line this was a minor infraction. Ahem. Bid rigging and price fixing are criminal. As Upton Sinclair said, ‘It is difficult to get a man to understand something when his salary depends on his not understanding it.’

Update 4:15 AM: Aha, I was not quite on target as to the reason for the Diamond resignation. He threatened to open war on the Bank of England at the Treasury select hearings. Per FT Alphaville (hat tip bob, emphasis original):

Bob Diamond is threatening to reveal potentially embarrassing details about Barclays’ dealings with regulators if he comes under fire at a parliamentary hearing on Wednesday over the Libor rate-setting scandal, according to people close to the bank’s chief executive.

“If he is attacked, he will fight back,” said one person familiar with preparations for the Treasury select committee hearing. Such a confrontational tactic could aggravate the fraught relations between the bank and the authorities after Barclays paid £290m to settle an investigation by UK and US regulators over the bank’s involvement in manipulating key interbank lending rates.

There were already overt threats to drag Paul Tucker, a leading contender to take over from Sir Mervyn King as BoE governor, in to the mire by suggesting that his unit somehow condoned fantasy Libor quotations.

But that’s not the point. You just don’t threaten the Bank. The City of London is not some sort of financial democracy. It is a hierarchy. It is not Capitol Hill; political brawling is prohibited.

We have not had a confrontation reach that level in the US, but this attitude seems to be remarkably wanting here.

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In other words, yes we lied in our submissions but only for reasons of self defense, to defend our stock value from evil speculators. Can anyone spell market manipulation? Was anyone at the bank buying or selling its stock while this was going on? Wait till the class action bar gets its nose around this.

The TED spread is the difference between the interest rate banks charge each other on 3-month loans (3-month LIBOR) and the interest rate on 3-month U.S. Treasury bills. It’s a measure of financial jitters. If banks believe that their peers are solid, they should be willing to lend each other money on almost the same terms as money lent to Uncle Sam. When they start demanding a big interest rate premium, that’s a sign of fear.

After dipping a bit — but not enough — on news of the Fed’s new policies, the TED spread has now shot up again in the wake of Bear Stearns. Things are not going well.

Lambert, and interested NC readers — the Guardian has a terrific interactive datablog that enables anyone to click a variety of banks and see the differences between that bank’s offer, as opposed to the actual LIBOR rate.

You can alter the timescales, and select by bank.

With any luck, those members of Parliament looking into the LIBOR rate-fixing, along with investigators in the US, will take a few minutes to play around with this interactive. It’s really, really interesting.

Perhaps we will get lucky and see a task force composed of Justice Dept. lawyers, patriots in the military and of course both the Israeli and Saudi Ambassadors to the U.S. commission such a comparison.

“The unacceptable face of banking” was the incumbent U.K. Business Secretary, wealthy member of the establishment,(Lord) Peter Mandelson’s description of Bob Diamond back in 2010. Mandelson was quoted as saying that Diamond got his money “not by building business or adding value or creating long-term economic strength, he has done so by deal- making and shuffling paper around.” (Times. U.K.)

Barclay’s have a long history of criminal conduct, including a 2009 conviction for wire fraud (money laundering). The Wall Street Journal covered the story, but it’s since disappeared down the usual memory hole.

Barclays paid a record US$290 million fine after they were caught stripping details from wire transactions in an effort to facilitate transfers to countries under US financial sanction, and other third parties. Of course, anyone else committing such a crime could reasonably expect a very long jail term.

Would that be, say, wire transfers of payments my clients received from work in the UK to their U.S. banks, with a tiny fee taken out of them each time? When we tried to check with the bank in London and then the banks in NYC and LA, nobody could explain this extra fee that was not a “wiring” fee (which I don’t understand either). We called it “the mid-Atlantic Gremlin” who took the money.

Bunch of cowards. They talk about taking risk in derivative contracts, but rig a reference like LIBOR. At least the real life mafiosos had to worry about getting wacked by a business associate. What wusses.

The FT Alphaville writer’s explanation of Diamond’s departure – that he neglected the fundamental principle that ‘you just don’t threaten the Bank’ is plausible. However, the cavalier treatment of the question of whether the BoE was or was not complicit in rate-fixing here, and elsewhere in the paper, has worrying implications.

Another of the FT reports quotes the CFTC and FSA findings, including the latter’s claim that even though more junior staff at Barclays believed that the BoE had instructed Barclays to lower their Libor submissions, ‘that was not the understanding of the senior Barclays individual [Diamond] who had the call with the Bank of England official [Tucker].’

And the reporter goes on to comment that:

‘With such firm support from the official documents, Mr Diamond would have to demonstrate that these conclusions were incorrect, something that would also risk showing he knew much more about Libor manipulation than he has so far admitted.’

But of course, precisely the fact that Diamond cannot accuse Tucker without incriminating himself opens up the possibility that, while he is clearly being less than candid, so too is the BoE. It would indeed be very difficult for Diamond to sustain the claim of official complicity, without abandoning the claim that the belief of the submitters that they were acting on BoE instructions was the result of a mix-up down the chain of command.

Equally, if one puts the fact that the ‘support from official documents’ depends crucially on what Diamond told the FSA, the fact that prudent bankers are circumspect in dealing with central banks logically implies that it is absurd to treat his earlier account of what happened as necessarily more reliable than that he is giving now. The Treasury select committee must decide what it is trying to do – conduct a proper forensic investigation, or prevent this scandal engulfing the BoE.

DH, your last sentence implies that there is a choice between the two. Can there be any doubt that the the owners of the Bank of England will be protected at all costs, and that everything else is potentially “on the altar” of negotiation? Can there be any doubt–at this moment in “universal evolution” when the very SURVIVAL of England is at stake–that even the bluest blood and soil of the “realm” is subject to sacrifice? Let the cosmic negotiations commence.

Popper’s dream MAY YET come true in “perfidious Albion” as someone opens the door wide to the the Way of the World in C.21: Enlightened Self-Government of the People, by the People, and for the People. Let freedom ring.

I think that the impulse to stop these inquiries opening up the whole can of worms of the complicity – or active involvement – of authorities in many countries in fixing markets is a very powerful one. The glee that the FT journalists take in the way that Diamond is boxed in is indicative of the underlying defensive response. In keeping this aspect under wraps, the fact that Diamond is cordially loathed – not without reason – is helpful. As also may be the fact that he is of American origin (see the FT’s rather unpleasant joke that threatening the BoE ‘will get you deported.’)

However, I am sceptical about the notion that Diamond is simply lying about the complicity of the BoE. And I think he may well be absolutely furious – in that he is likely to have hoped that being out in front in collaborating with the investigations would save his position. The question then becomes whether, now he is no longer at Barclays, he is furious enough to exercise a ‘Samson option’.

Change is highly unlikely. Key sectors of the UK establishment are like mutually protected, interlocking pieces on a Chessboard: The judiciary and Army are loyal to the Crown, the Crown is head of the Army and established Church. The police and the civil service swear loyalty to the Crown, not the public, and it’s the Crown (as head of the Church and Judiciary), not the people, that organise public prosecutions. The ‘people’ are still subjects, and play no role in the political process.

It’s also important to note that job loss isn’t the same for these two as it is for the millions of us.

I don’t forsee either one living in a Range Rover packed with household goods parked at a church parking lot at Brighton Beach. Two immensely wealthy fellows are going to remain immensely wealthy, two well-connected operators are going to have lots of strings to pull, and as soon as the noise is made to go away, two pillars of the community will go back to their social circuits.

Our own Attorney General has compounded felonies every day he’s had the job. I don’t suppose he’s more talented than the UK justice system.

Yes. If these were poor black men facing the same allegations of felony crimes the police would be acting much differently.

Say these were nonviolent drug felonies . . . the police would have kicked down his door violently, broken windows, shot his dogs if his dogs attacked, and terrorized his family to arrest him. He would be hogtied, humiliated, possibly beaten, and electrocuted for simply for looking at the militarized police in the wrong way. To arrest this black man the police will arrive in their new battle tank with militarized weapons.

This rich terrorist bankers never have to suffer this fascist policing for their crimes. Even if he is charged and punished Obama will probably pardon him.

Obama presides over the largest police state probably ever known. We imprison more of our fellow citizens than any other country in the world. Mostly black and brown men.

Yes, the voluntary disemployment of one or two gang-banksters brings little joy, as unemployment for the rich and shameless is really quite meaningless.

Diamond was likely induced, with strong incentives, to fall on his sword, to take one for Her Majesty’s team with a stiff upper lip. This is merely a teapot tempest. Citations will be issued of course, and token fines paid, but in the end, after a bit of hand-wringing and shouting in Parliament, the old boys’ club will be back to looting as usual.

Orange jumpsuits and shackles are sorely needed all ’round. Lacking that, eventually, only guillotines will do.

By forcing Barclays to fire Diamond, did the Bank just turn the focus onto itself and FSA?

If so, is the Bank now on the slippery slope of being moved significantly down the hierarchy? Remember the Bank has been highly resistant to anyone examining its conduct before, during and after the financial crisis began.

What would such an examination reveal? Did Paul Tucker make more phone calls to other banks on the day that he talked to Mr. Diamond? Did these banks also misunderstand and reduce their Libor submissions?

After resigning as CEO of Barclays this morning, Bob Diamond may yet exact some revenge on the government when he testifies tomorrow in front of the Treasury Select Committee.

There are two LIBOR fixing scandals – the first involves traders massaging the settling of LIBOR rates a few basis points, mere hundreths of a percent, off market reality to flatter their trading books. It appears to have been going on for years and not just at Barclays. This was not so petty corruption.

The second LIBOR fixing scandal is of a different order altogether – it involves the wholesale systematic substantial misrepresentation of true LIBOR, with the encouragement of the Treasury, the FSA and in particular the Bank of England. The policy was to under-report LIBOR rates at much lower levels than were actually trading in the market. This deliberate policy was to cover-up the increased risks to the UK banking system revealed by higher LIBOR rates.

It is emerging that Gordon Brown’s economic adviser in Downing Street, Shriti Vadera, an ex-UBS investment banker, circulated a paper on ”Reducing Libor” at the height of the banking crisis, which she argued would be “a major contribution to the stability of the banking system and to the health of the economy”.

That message will have gone out to the Treasury in Whitehall, the regulators and the Bank of England. They in turn will have given a nod and a wink to the investment banks. Bob Diamond is reportedly furious that the “lowballing” of LIBOR rates by Barclays – which was explicitly encouraged by the authorities to stabilise already panicked markets – is being used against Barclays. Bob Diamond is expected to testify tomorrow that the Bank of England’s deputy governor Paul Tucker encouraged the “lowballing”.

The politicisation and manipulation of interest rates is ongoing even after Gordon Brown and Shriti Vadera are long gone. The £275 billion Quantitative Easing (QE) programme implemented by Mervyn King with George Osborne’s blessing is designed to artificially lower interest rates. We currently have a false market in Gilts, it is arguably the biggest bubble since the South Sea Bubble. It is cheating pensioners and savers of income on an unprecedented scale. This is a robbery organised from within the Bank of England …

1) if your quants knew that LIBOR was biased and no one else did, what would the trading advantage be – especially when amplified by the 40x leverage that was common at the time?

2) if LIBOR was suppressed, then TED was reported as being greater than it actually was; so, how much money was lost (by some) and made (by others) due to the exaggeration of TED at the height of the crisis? How many margin calls where larger than they would have otherwise been due to this manipulation?

3) if this has been going on since 2001 and involved over a dozen banks (including London affiliates of US banks) then presumeably hundreds if not thousands of people were in the conspiracy? and NO ONE TALKED? this is going to force me to revise my opinion on efficacy of conspiracies and the wisdom of ben franklin’s maxim “three men can keep a secret if two of them are dead.”

All in all, this looks like trillions of dollars may have been syphoned from the pockets of those who weren’t in “the club” of LIBOR-liars into the pockets of those who were.

Let us assume for the sake of argument that Diamond is telling the truth – the Bank of England, recognizing that the US Federal Reserve was manipulating the Treasury market, might have sought a lower LIBOR to avoid a huge TED spread, margin calls and the like. That is, there is reason to believe that BOE could have had motives to accomplish exactly what Barclays did.

We should not be shocked that such market manipulation was global and both accepted and directed by individuals at the very pinnacle of global finance. That is, Diamond’s excuse seems at least plausible to me.

Barclays are the defendants in a action in the Southern District court of New York brought by Bayerische Landesbank . In the complaint filed on 25th April 2012 paragraph 1 ‘ Summary of the Action ‘ begins ‘ This action arises from a fraud perpetrated by Defendants who misrepresented th single most important fact concerning the purportedly “AAA”-rated notes issued by the Markov collateralized debt obligation (“CDO”)structured, designed and marketed by Barclays Capital Inc.( ” Barclays”).Specifically, Barclays led BayernLB to believe that the more than $57 million of Markov notes it purchased were backed by assests thathad been independently evaluated and selected for their credit quality, and which justified the “AAA” credit ratings assigned to the CDO notes. Defendants represented that theselection and management of the CDO collateral assets was delegated to State Street Global Advisors (” Sate Street”) -an experienced CDO manager whose sole duty was to maximize return to benefit Markov and its noteholders, independant of Barclays. Defendants’ representations about state Street’s role as the independant Collateral Manager were critical to BayernLB because Barclay’s other roles in transaction precluded it from serving as Collateral Manager for the Markov CDO.

In truth, the Collateral Manager for the Markov CDO-State Street- did not independently “select” the assets included in the CDO using an investment strategy that was ” disciplined and seeks to control risk, ” ” designed to produce consistent returns,” and “designed to ensure that appropriate due diligence is conducted prior to any security purchase,” as the Defendants represented. Indeed, the referenced assets were not ” selected” by state Street at all. Insted, unbeknownst to BayernLB and contrary to the statements in Markov’s offering materials, Barclays itself selected and even created certain of the assets referenced by Markov because it knew those assets would fail, and that Barclays would profit as a result. ‘

Yes, this is the very same Barclays . It is not possible for Barclays and all these other banks to make the fictional profits they continue to post without commiting fraud day in and day out .

Having just read the so-called “RED” notes of this conversation between Bob Diamond and the BoE’s Paul Tucker (see Guardian liveblog for details) it strikes me that, contrary to the – self-serving – conspiracy theories, its just possible the the BoE was simply doing its job by asking Barclays “Why are you LIBOR submissions always at the hight end ?”.

The unstated, but real, questions being “Why won’t anyone lend to you ? What are other banks seeing that you are not telling us ?”. Remember that Barclays we’re fighting desperately to avoid having to be recapitalised by “taking the Queen’s shilling” in the same way as RBS, LLoyd, HBOS.

To put Tucker’s question at its strongest “Are you lying to us about your actual financial strength ?”.

This is not to exculpate the BoE for its lackadaisical attitudes before the GFC and its ludicrous initial responses to it but merely to suggest that by late 2008 it had decided it had better start to play catch-up, if for no other reason than plain embarrasment … and for a Brit (of any class) fear of embarrasment can be a more powerful motivator than loss of job.

“Bloomberg talking heads today are taking the line this was a minor infraction.”
They are probably right that this is a minor infraction because only US bankers know that they have been covering up a lot worse stuff which the American public does not know yet.

Bankers name starting with “D” appear to be certified crooks whether it is Bob DIAMOND or Jamie DIMON. These punks should be in Guantanamo prison

In fresh evidence posted on Barclays’ website, the bank disclosed a conversation between Mr Diamond and Mr Tucker on 29 October 2008.

An internal memo sent by Mr Diamond to other Barclays executives said: “Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing.

“Mr Tucker stated the levels of calls he was receiving from Whitehall were senior and that, while he was certain that we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”

Barclays said that subsequent to the call, Mr Diamond relayed the conversation to Mr del Missier. The two men were at the time senior figures at the firm’s investment banking arm Barclays Capital.

Although Mr Diamond did not believe Mr Tucker was instructing Barclays to manipulate its Libor rate, it is possible Mr del Missier concluded it was, the bank said.

Barclays said in its evidence: “Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect to the [traders].”

It is unclear who the “senior Whitehall” figures mentioned by Mr Diamond were.

Could not happen to a nicer guy – he screwed Lehman employees out of billions and broke his promises to them. Good riddance. Now they should claw back the last 5 years of bonuses and compensation from him – anything over $125K a year.

Thanks for the article. I am still trying to understand – please, somebody correct my mistakes:
There was alleged collusion among the 16 banks which set the LIBOR rate, and it has been lower than reality for maybe the past 10 years. This helped the banks maintain credibility by pretending they were borrowing money at lower interest rates than they actually were, and maybe it allowed them to make predictive speculative investments based on inside information. It affected pretty much everyone else because many/most interest rates are pegged to the LIBOR so decreasing LIBOR would have an effect of decreasing interest rates for personal credit, mortgages, bonds, …
So it would artificially lower gains of investors in bonds and it would also artificially lower interest payments across the board (mortgages, credit card debt, …)
What did I miss?

Manipulated to show more profit to derivative traders the rest of the time.

And remember, thanks to the level of interest rate swaps alone, lower interest rates will lead to higher payouts on lots of instruments. For instance, RMBS have interest rates swaps in their structures. Lower rates lead to higher payments on the swaps.

George Osborne,finance minister, educated at Oxford with a second class pass degree in….History!

His entire life is based on inherited money. All his chums are the very bankers that loot from the masses. It is the old division of class in British society. No wonder he is trying to stall a proper judical enquiry.

Ed Balls, Labour MP, Oxford educated with a First class pass in Politics, Philosphy and Economics, and then went to Harvard for further Economics.

The only hope is that Labour which has not had funding by the banksters. What the US was unable to do; real financial reform of banking (e.g. separation of retail and casino banking) the UK might be able to do.

Labour must stick to its original demand: An independent juidical enquiry; the outcome of which will reveal more than just manipulation of LIBOR.

Diamond is right, the gov’t authorities were all to aware of what’s going on. Diamond is already making a stink. The reality is you can’t trust the government or the banks to honesty report data. In the case of Libor it should’ve been an exchange where trades are recorded.

Clif High has been predicting “secrets revealed” as part of his web bots “Shapes” reports for some time. I’m thinking this event may be the crack in their armour we’ve longed for.
If you’re open to what Clif has been saying pls check out his website at halfpasthuman.com There is no charge for his most recent stuff; be sure to listen to his podcast.
I have no connection to Clif other than high respect & we exchange emails from time to time. If he’s right this is a piece of the puzzle we’ve waited for.

If the e-mail from Diamond to John Varley and Jerry de Missier provides an accurate record of the conversation with Tucker, it would indeed appear, in relation to the Libor fixing in 2008-9, to exonerate Barclays and leave both the BoE, and also officials and politicians, with a lot of explaining to do.

Note, first, the opening:

‘Further to our last call, Mr Tucker reiterated that he had received calls from a number of senior figures within Whitehall to question why Barclays was always toward the top end of the Libor pricing.’ So clearly there had been a call, or calls, in which Tucker had drawn attention to concern from Whitehall at the high Libor figures Barclays were submitting.

According to Diamond, he asked Tucker if he could ‘relay the reality that that not all banks were providing quotes at the levels that represented real transactions.’ The response from Tucker, according to Diamond, was ‘oh, that would be worse.’ It is not self-evident what this means, and this is a matter which Tucker needs to clarify. But an obvious possible construction is that Tucker was suggesting that the situation would be worse, if in fact banks other than Barclays submitted Libor figures which broadcast to the world how difficult they were finding it to get funds.

Confronted by Diamond’s claim that the high figures from Barclays did not reflect their cost of borrowing, but the fact that they were providing honest estimates, Tucker could have said that he would go back to the ‘senior figures’ and explain that the problem was that the figures of others were dishonest – rather than Barclays borrowing costs high.

Instead, if Diamond’s account is correct, Tucker

“stated that the level of calls he was receiving from Whitehall were ‘senior’ and that while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently.”

In context, this clearly suggests that Tucker was suggesting first that it was not necessary that Barclays should continue to submit accurate submissions, and second that there was heavy pressure coming from Whitehall to make Barclays lower the figures – which, by implication, Diamond would be wise to take into account. The question as to whether this constitutes an ‘instruction’, as de Missier thought, would seem to be essentially a matter of semantics.

If this is so, either the Whitehall officials concerned were hopelessly naïve, and the BoE was not prepared to explain what was going on with Libor, or the officials were colluding in the faking of the figures. And the same either/or applies to the key political figures involved.

In relation to the suggestion that Osborne’s reluctance to have a full judicial inquiry reflects ‘the old class division in British society’, meanwhile, I would point out that the politicians on whom Diamond is throwing the spotlight were not, by any stretch of the imagination, upper class. Not only were they Labour, rather than Tory, but the key figures were not even Oxbridge. The then Prime Minister and former Chancellor Gordon Brown, who continued to play a decisive role in shaping economic policy, was the son of a Church of Scotland Minister who was educated at the University of Edinburgh. The then Chancellor, Alistair Darling, is the son of a civil engineer, who was educated at the University of Aberdeen.

As to the officials, Mervyn King, did indeed go to King’s College, Cambridge. However, he is the son of a railway worker who retrained as a geography teacher, and went to Wolverhampton Grammar School. So pivotal figures were no more upper class than Diamond himself – whose parents were teachers.

In terms of their politics, Brown has always been traditional Scottish tribal Labour, Darling was a Trotskyist as a student, while King was a Liberal.

The unity of British elites which has got us into this mess is not one of social origin. It arises from the fact that a very wide range of people, coming from very different social backgrounds, and intellectual starting points, came to accept the kind of neoliberal claptrap purveyed by Alan Greenspan. See, for example, the encomium to Greenspan which King produced in 2004, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2004/speech209.pdf

Had King paid attention to the sceptical evaluation of Greenspan by his fellow Cambridge economics graduate Andrew Smithers, there might have been no need for a cover-up. Much of what has happened since was accurately anticipated in the paper by Smithers and Stephen Wright, published in 2002, under the apt title ‘The Economic Consequences of Alan Greenspan’, available athttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=298028

I doubt the Government will do anything about these corrupt Bankers, because, a couple of years ago, Directors of a business that about fifty people worked for (including myself), acted illegally and went on to exploit the staff.

Then, the same unscrupulous Directors simply used holes in Employment law to withhold staff wages and ultimately cheat employees out of the money that they had worked hard to earn ( http://bobblackmanmp.info/ ).

Despite Employment Tribunals agreeing that staff were treated badly, the High Court said that they are powerless to help because their is noting stopping this in law.

Now, to rub salt in the wound, the local MP and Government officials simply dodge the issue by claiming that it is not in the public interest to do anything about this matter, whilst refusing to have the Directors struck off, failing to introduce new laws to outlaw these kinds of sharp practices, and not even bothering to call for an inquiry into this scandal.